Transcript 2017 Workers` Comp updates

2017 Workers’
Comp Updates
How it affects
CA employers
Rancho Mesa Insurance Services

Established 1998

National Best Practices Agency (10 years)

Local Independent Insurance Agency

Liability, Property, WC, Surety, Benefits

“Developing solutions, Building trust, Protecting
clients… One relationship at a time”
Why Have Workers’ Comp?
 It’s
the law
 Pays for an injured worker’s medical bills
 Pays partial disability benefits
 Pays permanent disability benefits
 Pays death benefits
 Pays for mileage
 Benefits are not taxable income
Facts:
Courtesy of The California Workers’ Compensation Institute

San Diego claims account for 8.1% of all WC claims in the
state, but only 6.2% of benefits paid

San Diego County has the highest percentage of claims
filed by women in the state

Average benefit payments on the San Diego claims were
more than 10% less than in the rest of the state

San Diego claims are more likely to be medical-only cases
and less likely to result in permanent disability

Litigation rates are lower than the CA average
What’s new in CA?
 AB
2883
 First
Aid reporting requirement
 Experience
Modification Rating change
 Proposition
64: Recreational Marijuana
AB 2883 (Assembly Insurance Committee)

Effective January 1, 2017, AB 2883 makes certain
changes to the definition of employee and
exclusions to the definition of employee

Officers and members of boards of directors will be
covered employees unless the officer or member of
the board of directors owns >15%

Working members of a partnership or LLC receiving
wages irrespective of profits from the partnership or
limited liability company will be covered employees
unless the individual is a general partner of a
partnership or a managing member of a limited
liability company.
AB 2883 (Assembly Insurance Committee)

In each case, the person in question must
execute a written waiver

The provisions of AB 2883 are applicable to all
in-force policies as of January 1, 2017

Any individual that had been exempted from
will need to be added to the coverage
provided by the insurer until such time as a
duly executed waiver is received and
accepted by the insurer.
Reporting First-Aid

Medical Only or Medical Claims Only:
amended to clarify that all claims for which
any medical care is provided, including those
involving first aid, must be reported to the
WCIRB

The WCIRB always required carriers to report
first aid claims, but regulatory language was
ambiguous. This clarifies the matter.

How does this impact CA employers?
Experience Mod Formula
Change
 Prior
to 1/1/17: The first $7,000 in losses for
each claim is considered primary and
counts fully in an employer’s X-Mod.
 Any
losses above $7,000 are considered
excess and have less weight in the
experience rating formula.
Experience Mod Formula
Change
 Amended
to change the experience
rating split point from $7,000 to a variable
Primary Threshold
 The
Primary Threshold is now determined
by Expected Losses (calculated based on
reported payroll)
Experience Mod Formula
Change

Under the 2017 formula, loss amounts above the
split point will no longer factor into the experience
modification calculation.

Excess losses, which represent the severity of
claims, can vary widely based on factors that may
not be under the control of the employer.

The variable split point plan places increased
weight on the frequency of claims


better predictor of future claims
may be more controllable by the employer.
Experience Mod Formula
Change
Results (courtesy of Workers’ Comp Executive)
7%
of risks remained the same
45% increased
48% decreased
Proposition 64

25 states allow medical marijuana

Only 5 states exempt workers’ compensation
payers from liability for medical marijuana

CA does not require any health care service
plan to be liable for reimbursement

Cash business: payment cannot involve
federal banking system
Proposition 64

California: Law precludes compensability for
injuries caused by intoxication.

If a CA employer can prove that marijuana is the
cause of work-related injury, then the injury is not
compensable.

Proving Marijuana caused the accident presents a
hurdle.

Impairment cannot be objectively measured.
Proposition 64
 According
to a study by the National
Institute on Drug Abuse:
 Postal
employees testing positive on preemployment drug test had 55% more
industrial accidents, 85% more injuries,
and a 75% increase in absenteeism
Proposition 64
 Working
Through the Haze: Implications of
Legalized Marijuana for California
Workers’ Compensation System



By Ellen Sims Langille, General Counsel
California Workers’ Compensation Institute
CWCI.org
What can I do?

Create a Return-to-Work program (10% credit)

Hiring Practices, Hiring Practices, Hiring Practices!

Steer employees to the medical provider network

Keep in touch: enhances employee recovery

Alternative financing options: captive, ded, SIG
What can I do?
 Understand
the stats:

Frequency, Severity, Indemnity

How do you compare to your industry?

Identify trends

Know your best possible xmod
Broker role: what should a
broker do for you?
 Advocate:
claims, classification, pricing
 Education
 Introduce
Resources
 Understand the market
 Identify trends
 Know and address your exposure to risk
 Manage risk
Thank you
Sam Brown
Vice President
Rancho Mesa Insurance Services
(619)937-0175
[email protected]
www.Ranchomesa.com